News Corp. Withdraws Bid for BSkyB

Today’s developments are not surprising to us given the public outcry arising from phone hacking scandal at News of the World.

In our view, this is the prudent approach for News Corp to begin resolving what has proven to be a very thorny issue. In fact, we believe that the market had already been pricing in a substantially lower probability of deal consummation over the past week.

News Corp. was forced to drop a 7.8 billion-pound ($12.6 billion) bid for full control of British Sky Broadcasting Plc yesterday after a phone-hacking scandal at the News of the World prompted Prime Minister David Cameron’s coalition government to side with the opposition Labour Party to block the deal.